At a recent press briefing, the management of the NNPC traced the declining level of gas supply to the power sector to incessant vandalism of the pipelines. AUGUSTINE OKEZIE examines the steps that should be taken by government to stem the tide and improve gas supply.
Briefing newsmen in Abuja at the corporate headquarters of the organization, the group Managing Director of NNPC, Engineer Andrew Yakubu, said that the drop in gas supply for power generation should be blamed ‘‘on rising incidents of outright sabotage of some crucial pipeline which has significantly eroded available gas supply to the power plants’’
Engineer Yakubu further explained that the quantity of gas lost so far amounted to 1,600mw of electricity, and that the pipelines affected by the vandalism included; Escravos –Warri stretch, the transfocados crude pipeline stretch, and the Escravos- Lagos pipeline system.
‘‘On the 25th of June 2013, an explosion rocked the ELPS and a further inquest revealed that the dynamite had been used on four ruptured points. Engineers from the Nigerian Gas Company were mobilized immediately to commence repair works ,but as repairs progressed, more points of rupture emerged,’’ he said.
Also speaking at the occasion, the group executive director, gas and power, Engineer David Ige, said that efforts are in place to install gas aggregators and structures that will ensure cost reflective tariffs and by extension reduce cost of gas supply.
He appealed to Nigerians to desist from sabotaging the economy through pipeline vandalization and to report any suspected act. He maintained that the cost of repairs and the length of time it takes to repair damaged ones have a negative effect on steady gas supply.
There is no mistaking the fact that Nigeria’s power supply is inter- related to gas supply and that what happens to one affects the activity of the other. The country has always been thrown into darkness each time there is a drastic cut in natural gas supply that is required to fire major thermal plants.
According to the Power Holding Company of Nigeria (PHCN), sources, electricity generated in the country as at the first quarter of 29013, stood at a little over 2,290megawatts with a loss of over 1,598 megawatts of power due to the vandalization of the pipelines which supply gas to the thermal power plants.
The Transmission Company of Nigeria (TCN) in a statement said the vandalization and the obstruction to effective gas supply to the power plants had forced PHCN to resort to “massive load shedding” a trend it said was responsible for the blackout presently being experienced nationwide.
“The massive load shedding is caused by vandalism of two major gas pipelines supplying gas to eight power generation stations in the country, namely Egbin/AES Thermal Stations, Olorunsogo, Omotoso, Geregu NIPP, Afam IV and VI Thermal Power Stations as well as River State Independent Power Station, resulting in drastic reduction of power supply by 1,598 megawatts,” said Dave Ifabiyi, spokesperson for TCN.
The added:“One of the vandalized gas pipelines takes supply from the Okolona gas plant while the other takes from Escravos. With the disruption of gas supply through the lines, the Nigerian Gas Company (NGC) is unable to move gas to Afam IV, Afam VI as well as the Independent Power Plant in Rivers State, resulting in generation loss of 593MW.
“Also, the second vandalized gas pipeline from Escravos to Warri , caused a cutback of 1,005MW in power generation from Egbin / AES power generating station, Olorunsogo, Omotosho and Geregu NIPP power generating plants.”
Nigeria is Africa’s largest oil and natural gas producer. Her heavily regulated petroleum sector has policies that appear ineffective in protecting the massive outlay of pipelines that runs through the various landscapes. Consequently, the demand for energy in Nigeria’s rapidly growing economy continues to rise while production of both oil and gas are in decline, thanks to the continuous sabotaging of the pipelines.
Pipelines are part of the crucial infrastructure of oil and gas production. They are quintessential for the transportation, storage and marketing of natural gas, crude oil, and refined petroleum products. Nigeria has several domestic crude oil pipelines that transmit crude to export terminals and domestic refineries. The pipelines peregrinate the landscape of the Niger Delta Region and run from 31 miles to as long as 383 miles, through mostly rural or swampy areas.
Available data indicate that most of the pipeline systems are jointly owned by NNPC and oil majors while the export terminals are operated by Shell (Forcados and Bonny terminals), ExxonMobil (Qua Iboe terminal), Chevron (Escravos and Pennington terminals) and Eni (Brass terminal).
The disruption of gas supply through pipeline vandalization, especially along the creeks has effected several consequences on the Nigerian economy .For instance, there are uncertainties in Nigeria’s investment policies and regulatory framework – particularly, the long delay in the passage of the Petroleum Industry Bill (PIB), that has caused a slowdown in oil and gas activities, and delays in project development, including LNG projects.
Perhaps encouraging oil and gas pipelines privatization appears one of the surest ways of guaranteeing its security and ensuring steady gas supply. It has been part and parcel of a recent world trend which has placed greater reliance on market forces and less dependence on government in the allocation of resources. Furthermore, privatization has in part been reinforced by the increasing globalization of the world economy. Decades of precipitated growth in international trade and investment have made competitiveness in international trade an essential factor in a nation’s ability to raise funds, create jobs, raise real wages, and generate wealth.
In emerging economies like Nigeria, privatization has become the only effective method of raising investment capital on favorable terms. Also, high levels of past public sector borrowing have saddled many nations with large levels of debt. As a consequence, these nations have had little recourse but to sell state assets to reduce debt and to generate revenue.
In general, the underlying objective having a privatized pipeline infrastructure include: raising revenue for the state; raising investment capital for the industry or company being privatized; reducing government’s role in the economy; promoting wider share ownership; increasing efficiency; introducing greater competition; and ensuring greater security and consistent gas supply chain.
Should the Pipeline privatization option takes a longer time in coming, government should undertake quick remedial measures, like courting the relationship of every communities that is hosting oil and gas pipelines and promoting their economic well being as a deterrents from indulging in violent activities; stepping up security patrol and secret surveillance on pipelines, amongst others.